AS IF A HURRICANE WASN’T BAD ENOUGH: How the Texas Legislature is going to make things worse.
Lots of questions about how the new Hailstorm Bill will affect claims related to Hurricane Harvey.
For those that don’t follow insurance law, recently Texas enacted what is informally called the Texas “Hailstorm Bill.” The Hailstorm Bill changed prior insurance laws related to Texas’ “Prompt Payment of Claims” statute and insurance company “bad faith” (when insurance companies flagrantly violate
the law regarding payment of claims) related to damages and loss caused by “forces of nature.” With Hurricane Harvey being a “force of nature,” this bill is now very important and may limit the claims that can be made for hurricane related damages.
The Hailstorm Bill applies to first-party claims, i.e., those payable to the policyholder (i.e., a homeowner making a claim on his home insurance) caused by “forces of nature.” The term “forces of nature” includes an earthquake, wildfire, flood, tornado, lightning, hurricane, hail, wind, snow or rain.
The changes are important and may limit your ability to recover against your insurance company for damages related to Hurricane Harvey.
So, what do you do if you have had flooding and other damage to your home because of Hurricane Harvey? I would:
Make Claim NOW. Contact your insurance agent and submit a claim prior to September 1, 2017. This will keep you under the current law that does not have the limitations found in the Hailstorm Bill.
Photograph EVERYTHING. Take photographs of everything. You house. The water levels. The damage to your properly. You have a camera on your phone. Use it.
Use Dropbox. Upload the photos to Dropbox or some other cloud-based service immediately. You can sign up for a Dropbox account which is free. You can then adjust the settings to automatically upload the photos you take from your phone to Dropbox. This will make collecting and sending the photos much easier.
Don’t wait. If you are not currently in your house because you have evacuated, but know that your home has been affected (wind, flood, etc), go ahead and make the claim. It will be weeks before the insurance adjusters can inspect anyway. You want to get your claim “on the books” before September 1, 2017.
Why the rush? Here are some of the changes going into effect come September 1, 2017:
Pre-Suit Notice & Abatement for Lawsuits over “Forces of Nature” Claims. The Hailstorm Bill compels policyholders seeking to recover for a claim caused by a “force of nature” to provide 60-days prior notice to the insurer before suing to recover interest penalties. The notice must contain, among other things, the damages claimed from the insurer, as well as the amount of reasonable and necessary attorneys’ fees incurred by the insured claimant. The claimant’s notice is expressly admissible as evidence in a lawsuit or alternative dispute resolution proceeding over the claim for which notice is given. Upon receiving notice, the insurer may request in writing the opportunity to inspect, photograph or evaluate the property that is the subject of the claim. If pre-suit notice is not timely made or a reasonable opportunity to inspect, photograph or evaluate the property was not provided by the policyholder, an insurer defending a lawsuit over a “forces of nature” claim may seek abatement of the suit (delaying it) until either the requisite notice or inspection is completed.
Other First-Party Claims. Policyholders with claims for business interruption and property damage to their own property, not caused by “forces of nature,” can still seek to recover penalties under existing law.
Claims Under Chapter 541 of the Texas Insurance Code. Chapter 541 of the Texas Insurance Code authorizes a private cause of action for damages when an insurer engages in “unfair or deceptive acts or practices,” including, among other things, (1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue; (2) failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear; (3) failing to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or offer of a compromise settlement of a claim; and (4) refusing to pay a claim without conducting a reasonable investigation with respect to the claim. Section 541.152 of the Texas Insurance Code authorizes an award of actual damages, plus court costs and reasonable and necessary attorneys’ fees, as well as trebled damages for “knowing” violations of the statute. The actual and trebled damages otherwise recoverable under Chapter 541—whether for “forces of nature” claims or other insured loss and damage—are unaffected by the Hailstorm Bill.
Effective Date & Prospective Application. By its terms, Chapter 542A becomes effective on September 1, 2017. Claims made and actions filed prior to this date will continue to be governed by the notice and damages provisions previously applicable to “forces of nature” claims under Chapters 541 and 542 of the Texas Insurance Code.
Joel S. Pace